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What to know about unearned income and SSDI

On Behalf of | Dec 13, 2023 | Social Security Disability

Social Security Disability provides income for some Indiana residents who are unable to work due to a disability. Once individuals get approved for benefits, they must follow certain guidelines for income. This includes earned income and unearned income. But, unearned income has stricter requirements.

Unfortunately, many SSDI recipients don’t understand the restrictions with regard to unearned income. That’s where a lot of recipients get into trouble. Here are some questions that can help individuals understand how unearned income can affect Social Security Disability payments.

What is unearned income?

Social Security divides income into two categories. Earned income is any income that’s earned through work. Unearned income is any income that comes through other means. This includes investment income, rental income, pension or retirement benefits, gifts, and inheritance. Any type of unearned income can have an impact on an individual’s social security disability benefit payments.

What is the impact on SSDI?

When an individual receives Social Security Disability (SSD) benefits, their unearned income gets taken into consideration when determining their monthly benefit amount. But, their unearned income isn’t taken directly from SSD benefits.

Instead, the Social Security Administration (SSA) calculates a separate adjustment factor to account for any unearned income that exceeds a specified limit. The amount that’s remaining gets deducted from SSD benefits.

What are the reporting guidelines?

When individuals receive SSD benefits, changes to monthly unearned income should get reported to the SSA. This includes reporting any income received from sources like rental property, investments, or an inheritance.

Social Security Disability rules regarding unearned income can seem confusing. But, with the right planning, individuals can avoid issues with their disability payments.